tv Bloomberg Markets Bloomberg February 9, 2020 5:00pm-8:00pm EST
paul: welcome to bloomberg markets. we are counting down to asia's major market open. ♪ paul: here are the top stories we are covering. $10 billion to sign to control the coronavirus. the who going to move on as infections may peak this month. business continues to real from the infection. -- reel from the infection. free to leave, a cruise liner in hong kong is released from
quarantine after the passenger get auise get a -- crew clean bill of health. getting a reminder of how u.s. stocks ended, giving up the gains we saw in what was a impressive week of trading last week. the dow jones is weaker by one percentage point. the s&p and nasdaq lower by half of 1%, a little over that. giving up the gains, despite the good jobs numbers coming out of the u.s.. in terms of setting us up for the first trading day of the week in asia, we have got nikkei futures looking weaker at the moment, off by about 1.7%. kospi futures weaker as well. positive open in sydney, higher by .1%. keep an eye open for trade balance for japan for december. new zealand trading this monday morning, going for about an hour
now, off .6%. let's get over to sue canaan. su: -- seeking in. su: the trump administration plans to lower the amount of money for border wall construction. dow jones reports the white house will request to billion dollars from congress later monday which is significantly less than what it called for a year ago. the lower figure reflects the fact much of the cost has been met bush -- met by shifting money from military resources. boris johnson is running to announce a boost in infrastructure focused on the north of england. this follows campaign pledges he made during the election. sources say the plan will include spending on 5g networks in rural areas and investment in public transportation. this could also give the green light to the as much delayed high-speed train line this week.
ireland faces uncertainty after its election results look set to leave traditional two-party structure in chaos. exit polls show a virtual dead heat between one party and their main opposition as well as a surge in support for another party. the irish republican army presented itself as a leftist alternative to the centrist consensus which has dominated ireland for decades. in thailand the authorities say 46 people were shot dead and 57 wounded after the bloodiest mass shooting in the country's history. the army sergeant who carried out the firing rampage was angry about a financial dispute and was killed after a lengthy standoff with police in a district northeast of bangkok. the prime minister says the incident was unprecedented in
thailand. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. paul: china is spending $10 billion to control the coronavirus outbreak. the first wave of experts sent by the -- goes to the epicenter of the disease. we have the latest in beijing. what is the uptake? you have the assistant director who is leading a team of medical experts to china. it will be leading a global form in geneva to try to accelerate research on the outbreak. we did have more cases reported around the world. a group in britain was diagnosed with the virus in the alps.
hubei province, they are dealing with a shortage of doctors and medical equipment but china says it will increase medical equipment production and drugs that are in shortage, encouraging makers to get up and running, and the government saying it will help companies secure funding, licensing. in terms of the government response, china has said it yuan of whation was allocated to fight the outbreak. they are looking at the first batch of specialty lending funds to combat on monday. there are nine major banks that are qualified for this special funding. that is part of a broader effort to short the economy, including liquidity's boost, lowering interest rates. -- liquidity boost, lowering interest rates.
on the bright side researchers say you are starting to see andilization of the cases, according to the london school of hygiene, infections could peak this month. by time it does in the coming weeks, one in 20 people may be affected in wuhan. province has been in lockdown for weeks now, very challenging circumstances to live under. what sort of economic impact are we seeing? selina: every day it is furthering disruption to china's economy, and china's hubei province is in the third week of a shutdown. this is an industrial powerhouse the size of sweden. it is at the heart of the country's auto industry. you have various groups and
national giants like honda that are making cars and components there. half of 20 global parts makers have been producing parts before the virus broke out. hundreds of manufacturers have links to the global supply chain disrupted. we also reported that on high which makes the majority of the world's iphones is asking employees not to return to work yet and that the shenzhen government is evaluating whether there could be correct protocols to make sure they are now spreading the virus and that it is containing a risk. when the factory restart depends on china's guidance. we have reported that the company has cut its 2020 outlook because of the quarantine at the theories as well as accented lunar new year holiday. paul: thank you very much for that update.
the government said the let us get over to hong kong now with yvonne man. >> they said at this point the latest measures are running mentioned,d as you the cost of the flow of people from china into hong kong has reduced significantly by 75%. three checkpoints remain open in the city. 918 people have been put into quarantine. which are hong kong residents. how they are tracking this so far is they are using mobile apps to help monitor the locations of the quarantine. they will start assessing the
tracking measures. . the government hopes these measures will reduce the threat of a community outbreak. at risk of local transmission. in the neck -- and the next few weeks will be critical. this is after we heard of a jump in the number of cases by a third -- 36 cases in the city. the latest case was a family of nine who tested positive after having a hot pot and barbecue meal. when it comes to services, the government stressing that has not been impacted by the quarantine. we are still seeing a steady flow of food and goods and supplies into the city so there is no need for panic. although the grocery store still have a few empty shelves. >> there was a small peas of
good news on midst all of this. some passengers stuck on a cruise line. >> this is the world dream cruise that was held in quarantine for a few days off the coast of hong kong. 3600 of the passengers and crew members were able to do some part the cruise liner on sunday. a were able to leave in batches after the 1800 staff members tested negative for this disease. you mentioned some good news there. as for the cruise liner off of yokohama. of six new cases on that cruise liner so that one remains the biggest outbreak outside of china. still to come, more on the coronavirus including the ramifications for global supply chain. the auto sector is as well as the phone producers are
>> columnists are grappling with ways to gauge the impact of of the impact of the coronavirus on the world economy. reassurednt xi president trump during the phone call that while there might be some delays in the purchase of american exports, the markers will in fact be met. your base case of the kuroda iris is for it to be contained. .
we think that the hit to chinese growth will probably on theorder of 3%-4% fall in first quarter and there will be some recovery in the second quarter as we saw with the stars . but this coronavirus seems to be going on for longer and is infecting more people. looking at the hit to growth, it will be longer and you will not be evil to regroup the negative impact on the first order. i think it will be difficult for china to honor the trade commitment by the end of the year. .3-.5 percentage points on the whole. >> how do you calculate that hit to global growth? >> it is extremely difficult. every single week, i feel like
we continue to update our forecast. the main things we look at for the chinese contribution to those are the-- main things that we can use if we can see what the impact to activity is through manufacturing or indicators like that. that can help us. but we have not had any of that data come out. it will come out the next few months. i, it is all speculation but think it is fair to say that global growth will not be as strong as what we were expecting a beginning of the year. from do have some data january. that will be of limited use to you as well. >> i think so. and the pmi's from last week for china did not have any impact from the coronavirus. we will probably have to wait 2-3 months though maybe some forward leaning indicators might be more useful. >> across australia, it is hugely exposed to whatever is
going on in china. the reserve bank says it is too early to tell. when will we get a sense of what the impact will be here? tourism.in hit is to we have to look at inbound arrivals. with sars, there was a huge heads. and they spiked back up in the following months so there was not too much of a negative impact. but now, there is a more stringent travel ban. go on for will longer. we expect to see a 0.2% hit to tourist arrival. and then you have to think about the impact on education. altogether, we are looking for a contraction of growth of about 0.5 here in the third quarter. >> taking a quick break to get some numbers across from china.
usedtime every day we are to getting an update on the coronavirus figures. the death toll rises to at least 902. 29,631.ncerned cases -- and an additional 91 coronavirus deaths on february the ninth. that takes the death toll to at least 902 and we will get some more numbers for you from china as we receive them. i just want to return to that point you were making about the economic impact on australia. we got a lot of information from the governor last week. he said there is a risk there will be more harm than good. is that the affect of lower bounds unless there is a really horrible downside to jobs? is consistently optimistic for its growth forecast.
theyw that on friday when released their updated assumptions for the next 16 months. they still expect by the end of the year that australia will get to 2.75%. between the two and that is why we see the rba issuing its cash rates -- even if we don't get a huge decline in jobs growth or a bit of a tick up in the unemployment rate, the fact that we still have growth coming in below their expectations and inflation still being low along with the thes to growth including coronavirus and the bushfires, we think they will get to the point where they are getting too far away from the forecasted assumptions and they will need to stimulate the economy more. >> while the u.s. of economy still continues to look robust. good job numbers at the end of last week. is your base case that the u.s.
will continue to power along? >> the strength of the labor to betterquite key consumer spending. the big risk for the u.s. is what happens to business investment. we know that during election years, business investment growth struggles. last year was not great for the capex growth. the coronavirus is something to watch and we have the election this year -- if we got a democratic president, i think the stock market would take a pretty big hit given the interest in taxation that would come from them. >> is there a sense that if things go really south, that the fed will ride over the horizon and make it all ok? well.t is a thing as and that is where the difficulty comes with forecasting. the impact on chinese growth.
the people's bank of china is already increasing liquidity. infrastructure spending needs a longer lead time. policymakers still have room to stimulate the economy. >> thank you's much for joining us. we have plenty more coming up including washington's presidential candidates gearing up for tuesday's primary in new hampshire. we will have more on that story next. this is bloomberg. ♪ ♪
i cannot say we don't know yet. the consensus is that bernie sanders is ahead although pete buttigieg is nipping at his heels. waysbeth warren is back a and joe biden is in fourth place. a little over 48 hours from now the polls will close, tuesday evening u.s. time. >> considering that candidates have come worse than second in new hampshire typically do not go on to secure the nomination, what are the implications here for joe biden? as strongen needs it a finish as he can get. he is counting on south carolina where he is number one in the polling right now but some say if he does not do pretty well here, he has few chances of making it that far. candidates have begun sniping at each other more than they did in iowa. looking at the issues here, there are one plate 4 million
people and they do not have a problem with the economy or unemployment. their concerns are skills and health issues. they haven't opioid concern and tourism is a big issue here. >> leading up to the primary, we have seen a change where candidates are putting their money. can you run through some of the details for us? >> the money is all-important. particularly with joe biden. he has had to pull back on some of the reservations he has made for television time in various places because he does not have enough money to go -- to keep going full out. bernie sanders is doing terribly well with $25 million in the month of january alone and from a lot of dollar donors. he has more money to put into television ads. the money is very important. they feed off of each other. if you do better and can get contributors to step up but if
you do worse, contributor as well want to back you. sanders,ms of bernie 78 years old. thehas become a part of debate again. is this politicking or could it prove more serious for bernie sanders? >> it is not lost on anyone because we have several candidates including president donald trump over 70 years of age. some people are saying -- really? why don't they get off the stage. veryernie sanders has a loyal and enthusiastic base and he is from vermont. he has a lot of support but how broad can it go? and new hampshire is different from elsewhere. it is not just democrats voting. those that are independent or not aligned and ask for a ballot and they can also vote. we will have independence as well as democrats voting. it will be interesting to see if bernie sanders can appeal to the
independence as well as the democrats. >> you mentioned earlier that some of the candidates are beginning to attack each other even more. can you give us a sense of the sorts of things they are saying? >> there is a question about whether pete buttigieg is really obama. are getting quite pointed as well. they are really going after each other. is vice president biden's understanding. ine buttigieg was a surprise iowa and joe biden is saying that he is the other moderate and he is moving up with momentum. it does not look like joe biden has the momentum. it seems his team has said they have to go after pete buttigieg really hard. >> thank you for joining us. they will have special coverage
of the primary on wednesday at 8:00 a.m. hong kong time. if you are watching from new york, it will be 7:00 in the evening. a quick check of the latest business flash headlines. securek is pledging to -- to improve security. the breach exposed the data of 29 million users. the social network says it will check more frequently for suspicious activity involving access to that access tokens. be in talks with customers in china to delay concentrate to extend the production slowdowns. we are told that it may give them flexibility. record 14thfor a straight day in london over concerns over the virus and the global slowdown. to 15,000 job
paul: 9:30 a.m. monday morning. the skies are clear, we had a biblical rain event over the weekend, the heaviest in almost 30 years. new south wales fire services says it has broken the back of the fires burning across the state. water levels are rising again. very pleased to have the rain. teachers looking more peaceful as well -- futures looking more peaceful as well, up .5%. i am paul allen. let's get over to su keenan. su: we will start with the latest efforts to combat the coronavirus. the world health organization is
leading an international team of medical experts to china in order to combat the spread of the virus. more than 900 people have died and the number of cases is approaching 40,000. more cases have been reported in singapore, japan and europe over the weekend. china says it is spending $10 billion to control the outbreak and calling for more global support for medical supplies. the cruise liner quarantined in hong kong because of concerns of contagion has been released after all passengers and crew were found to be cleared of the coronavirus. the ship had been in lockdown since wednesday, after three chinese passengers who left the ship earlier were found to have the virus. tests on all crewmembers worked completed ahead of schedule and all proved negative. the arab nations have toned down criticism of president trump's
middle eastern peace plan and have called for a moderate resolution which calls for a palestinian state based on 1967 borders but are not condemning the u.s. directly. tunisia is in partnership with indonesia, has -- also describes israeli settlements in the west bank and east jerusalem as illegal. iran continues to defy western sanctions and has displayed a new missile for the revolutionary guard. the military says the new short-range ballistic missile has boosted its range by 200 kilometers and cut costs in half. state tv says the fuselage is made up of materials of reduced weight and it can hit targets 500 kilometers away at a fraction of the cost of its predecessor. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in
more than 120 countries. i am sitting in. -- su keenan. this is bloomberg. paul: let's take a look at the markets. asx futures pointing higher by .1%. elsewhere looks like a down day after we saw a weaker close in the u.s., nikkei futures off almost 1.2%. the kospi down .75% and new zealand has been trading for 90 minutes and is weaker. let's get more on what we should be watching as trading gets underway. adam haigh joins us as well as david ingles. , we did see a big surge in u.s. equities last week, but what is going to impact sentiment today? adam: not just u.s. equities. we had this broad-based risk rally throughout the week that petered out friday.
you saw a pullback in u.s. equities and treasuries. that is providing the basis of the dampening of risk sentiment going into the asian trading week. there was a bit of news regarding the report from ak showing there are production into it -- production issues at factories around china there the foxconn shenzhen plant, they have told employees they will not restart reduction just yet. there is the ongoing lingering concerns across the chinese economy which continues to be the main thing global investors assess just how much of whether we get a growth dip and quick rebound in growth, continued efforts by the authorities to stimulate the economy and markets, or do you get more of a pronounced slowdown into q2 in the second quarter? -- and the second quarter? given how far risk assets have gone, especially the end of the
week where we had the biggest move since june last year, not surprising investors want to take money off the table. paul: i want to bring in david. we know china is the bigger piece of the em pie. how has this influenced emerging markets? markets lot of emerging would be looking to china for cues in what they do next. in comparison to sars, china was a 14 million, trillion renminbi. now you expect transmission to follow through. ands following rate swaps expectations last week. that was continuing to climb lower as risk assets are rallying. it does point to the fact that we are revisiting two things. central banks can heal markets
quicker than they can heal the economy. and when you look at us trying to figure out how bad the impacts would be to the chinese economy, just keep in mind, a large chunk of the economy was shot for half a month. for half a month. there is no indication that whole chunk will come online today. you understand while risk assets might continue to trade higher, em threats on the back of the renminbi might see further pressure. paul: as you mentioned, china looking to restart the economy and it will be a staggered restart after a long break. sense of the of a damage caused by the virus. david: we are getting inflation numbers today. whether or not that reflects anything substantive when it comes to the economy might be on
the back of producer rices. for january and half of january pretty much -- the phase one trade deal and that this long lull we are coming out of in some parts of the economy today. what i want to point out, it is a special lending facility that kicks in. they are providing very simple terms. they are providing a bunch of money through a lot of these major banks in china. nine major banks, city and local banks as well, and what they are trying to do is get money to parts of the economy that are either badly hit the korean -- -- coronavirus or these loans will be given at a very deep discount. that is why we will see of course how quickly china comes back online and whether or not
them coming back online exacerbates the spread of the virus. paul: it australia, boarding season will kick into gear -- reporting season will start kicking into gear this week. we have tepid expectations. that could derail the rally in the asx. adam: it depends on how thorough and outlook these companies can outlook these companies can get. lots of questions about sectors like the retail sector with consumer demand having been hit in part to do with the coronavirus and the lack of tourists or tourist numbers coming down, the big wildfire ofson that has been a hit some part to the economy. and then the big banks, cba with first half numbers, the prophet expected to fall. -- profit expected to fall.
throughout the early part of the are, that was premised on the rba continuing to cut throughout the year and perhaps a lower discount rate offering higher valuations. now looking for a cut during the year, certainly not as much as an easy and bias you would have had -- in bias you would have had in january. but his want to watch as the months progressed. and david haigh ingles, thank you for joining us. you can check out the gtv library for the charts we have been talk about and find that by going to gtv . as the human toll from the coronavirus continues to rise, impact on global supply chains spreading as well. we will go for the sectors from automakers to mobile phone producers. this is bloomberg. ♪ ♪
i am paul allen in sydney. you are watching bloomberg markets, asia. as the human toll continues to rise, the global impact on supply chains spreading as well. disruptions are showing everywhere from mobile phones to automakers. that is a month into the outbreak. let's bring in a managing director. in terms of timing, was it in a sense, could it have been worse because chinese new year, lunar new year, things slow down anyway? it it could have been questioned to a degree? >> one of the big challenges we have seen is it started to accelerate over the chinese new year period. out, a lot pointed
of factories have closed down. for manufacturing, people had put inventory into the supply chain. it had been producing with the idea they were going to take time off and manufacturers were going to be closed. now it will be critical to see which factories reopened. it is not just the factories but also transportation networks, the ports, shipping, everything really depends on what opens today and how much work starts. paul: you mentioned the inventory buildup before lunar new year. can we get a sense of how inventories might be looking now and how much material and supplies may be left? it is very: difficult to say. different companies and industries have different processes and ways of handling their stocks across the globe. before you have a rectory
shutdown, what you would do is build up an amount of inventory which would be then consumed while that factory is off-line. facte shutting to see the that enter -- starting to see the fact international companies are closing down operations in -- hyundai saying they have a shortage of parts area you are seeing shortages with high-tech manufacturers. the one down in shenzhen. this is just, if you like the tier one suppliers, mold -- the ones major multinationals and it with, the challenge will be in days and weeks where smaller companies that don't really register on these large companies, they have not been producing and inventory gets consumed and there is nothing left out there.
we have started to see there is a big effort going on to try and actually source suppliers outside of china. paul: you make a good point it is difficult to get a handle on the state of inventories for the different companies impacted. i suppose it is equally difficult to get a sense of when things return to normal. have we not seen the worst of the impact? christopher: i don't think we have. we are talking about this idea of a perfect storm. the fact that we have had closures, we don't know what is going to reopen. i can't stress enough the challenge across the just ask. we are starting to hear about ships not being able to dock. they are on quarantine. reports are closed because they don't have the necessary masks to do the loading and unloading.
there is a lot to come as a many questions about how this will impact the world. we have not seen anything like this before. the closest was the japanese earthquake, maybe the floods in thailand. seen whole cities quarantined previously. paul: are there some companies which are better positioned to do with this than others? we have been talking about foxconn, waiting on information whether it can reopen its plants, but is it more readable -- more diversified from other suppliers? christopher: what we have seen with the trade war issues, the suppliers in the high-tech sector have started to look beyond china and build up capacity and capability in parts of -- stability and capability in parts of southeast asia.
these organizations are better prepared. i don't think they have gone through scenario planning where you are seeing all capacity out of china shut. they are in a better position but whether they can cope with and meet the expectations moving forward is going to be a real challenge. paul: we did see a lot of supplier chain diversification taking place across the peak of the trade dispute. so is this automating? totally.er: one of the things we started to talk about is the future of operations, building resilient supply chains. we mean able to cope with shocks, able to respond to issues across the supply chain like what we are seeing now.
also, when we look at the diversification strategy, the idea of building capacity in different parts of the world, you can -- you can respond to demand quicker. we have seen personalization and desire for immediate delivery happens. this is one of those things which is going to accelerate that trend. as for automation, we are starting to see china has been the largest buyer of industrial robotics for the last couple of years now. i think we will start to see some of that acceleration continue in china, as they start to realize the challenges in having workers and workers connecting with each other and strength -- spreading the coronavirus. one of the things manufacturers don't like is disruption. anything to do is a good thing.
feeling of perhaps a touch of pessimism after last year when we saw as some major flops, the major contenders including latitude finance, which was meant to be the largest one at the last minute. there is some elements around that. stuff, in terms of macro we are seeing virus fears and we were chatting about very little travel going on now. that is affecting roadshows. even companies that haven't announced an ipo yet, or attracted, kind of exploring that option, no one is meeting internationally so it is hard to gauge interest in markets like asia because people are not willing to move. and people kind of wonder at a broader level about the appetite for small capitalization anpanies and and example --
example is junior miners. no one wants to plow money into speculative investments. the push is for yield companies. no one wants to be taking a risk on something that has a proven itself yet. it might the new normal ipo's. more and more the big stuff is getting pushed out to the second half of the year. it used to be some leading ipo's early in the year. to these some ipo'sg -- be some leading early in the year. it might be the new way things work the australian ipo market. paul: the trend is to begin in early and don't be late. early and don't be late. was looking for a market leader to show things were strong. with latitude went down, it took three or four smaller -- when
latitude went down, it took three or four smaller companies. it is a touch and go based game. it takes a little bit of conference to get things across the line. you look at the broader environment, we have seen even last week, casper, the mattress start of, they had to go down to $12. you need those indicators at the broader level to show that people are willing to take that jump, which we are not seeing. paul: thank you for joining us. both get a quick check of the latest business flash headlines -- let's get a quick check of the latest business flash headlines. this company is working with authorities to reduce the coronavirus spread. they have asked shenzhen workers to stay home after the extended lunar new year break to minimize the health risk. the guangdong government is
evaluating whether shenzhen's got the proper requirements in place. china, as ventures in the coronavirus continues to disrupt the global economy. vw sites limited travel for employees and the extended break for lunar new year. this one postponed production until february 17. except for the plant in shanghai with will resume monday. most of the volkswagen production will resume monday stay -- resume monday. air -- we have been told negotiations are at an advanced stage and the agreement could be announced this week. bombardierr and -- invested money in this before giving it up to another program. more still toy
come next hour on bloomberg markets asia. we will talk to the aapa director general about how the coronavirus is affecting the aviation sector. we areet a look at how trading on the markets. we have been underway in new zealand for almost two hours now. decline. continuing to it posted losses on friday, now off .75%. the kiwi dollar holding steady, 6405 -- $64.05. we are expecting home sales numbers out of new zealand this week. sydney futures pulling up. we have got the open in a little over three minutes. pointing higher by slightly more than .1%. the aussie dollar back from the $66 handle. that is it for the first hour of
billion to control the coronavirus -- haidi: deaths top 900. infections could peak this month. shery: the infection could affect china's trade obligations under the phase one trade deal, but larry kudlow says he sees few problems. free to leave, a cruise liner in hong kong is released from quarantine after passengers and crew did a clean bill of health -- get a clean bill of health. haidi: let's take a look at how we are starting off, caution is the name of the game after u.s. stocks snapped a four-day winning streak despite labor market numbers out of the u.s.. investors turning their attention with renewed fears of the spread of the coronavirus as death and infection continues to climb. aussie markets just coming online, seeing quite a bit of caution. looking ahead to futures
in hong kong as well as across the rest of asia, looking pretty much costless -- looking cautious. nikkei futures flat. you have a little bit of weakness with u.s. futures and australia with the staggered start in sydney this week, off by .1%. shery: we are getting a cautious start. we have seen the global death toll from the coronavirus topping 900 which would be more saw at the start, this is china has set a $10 billion spending plan to control the outbreak. selina wang has the latest. efforts toparing any control this outbreak. tell us about the latest development. selina: anytime you have the world health organization leading a team of medical experts heading to china, the
in geneva toforum accelerate research into the outbreak. over the weekend we had more cases reported around the world. ons sharingbrit a ski holiday in switzerland. you have a shortage of doctors in hubei and equipment. equipment willnd run at full speed, even saying it will help companies secure funding, licensing facilities and raw materials if needed. in terms of the broader chinese government efforts, they say yuanspent 1.30 5 billion of what it has allocated to contain the outbreak. the central bank is providing the first batch of specialty lending funds for combating the coronavirus on monday. there are nine national banks and some local banks 15 for this
special lending. -- qualified for this special lending. boostwill be a liquidity and reduction of interest rates. you mentioned the number of cases. it is topping 37,000 as well as 900 deaths. you are starting to see a stabilization of cases in terms of reporting in hubei province. scientists from the london school of hygiene and tropical medicine say the number of infections may peak this month but the number of people wuhan could be one in 20 people by time it piques. -- peaks. haidi: we talked about locking down an entire province. what indication do we have about the economic impact on hubei? selina: it is now in the third week of a shutdown. every day that furthers the
economic team to the region as well as china's global economy and forces perspective on the size and scope. hubei province is an industrial powerhouse that is about the size of sweden. it is a large producer of phosphorus, at the heart of the veryl car industry with local groups and international groups like honda. 20e than half of the top parts makers have produced components there before the virus broke out. no hundreds of manufacturing -- now hundreds of manufacturers are dealing with this disruption to their supply chain. one company is asking people in shenzhen not to return to work and that when they restart direction, it depends on the local government. foxconn has implemented measures to contain risks for the
outbreak, including setting up a virus control system and quarantine location. this company is going to be disruptionse of with the revenue. haidi: selina wang there in beijing with the latest. let's get more on the pboc's special measures to combat the outbreak expected to start today. we are looking at the special billiong trenches, $10 being spent to combat the economic effects of the virus. the messaging from the pboc, we will do whatever it takes and still maintain financial stability as a key objective. >> they haven't put -- what is going on today is the latest of the emergency stop have rolled out. they told nine of the biggest banks to speed up loans to the companies most affected and need the cash. more broadly we know they won't
-- they have also injected liquidity to shore up confidence and tempered with interest rates a little bit. they haven't yet gone full bazooka because we don't know the full extent of the extent on the economy. we don't know when industrial reduction will be up and running. i think when the pboc gets a sense of how much work it will have to do, we will get a clearer sense of the stimulus package. these companies is good but china has always suffered from bad loans. really huge leverage in the economy. this chart showing how big corporate debt is. those are the bars in white. what would this do to the rise saidd loans which the bank it would increase? we are having warnings on an almost daily basis saying there will be stressed sectors.
especially those in the most vulnerable areas and that will lead to pleasure -- pressure. we have had warnings from officials making the same point. it goes to the broader story about china's economy. with the increase as expected, the pboc is focusing on growth and not deleveraging. they have not gone full bore on stimulus but they have broader concerns with the debt story. they are looking at stabilizing the economy and shoring up growth, so i am sure they are willing to tolerate the loans from an already low level. they would rather have stayed labor -- stabilization instead of deleveraging. haidi: they are very effective in combating these. are we expecting to see more policies being used by central banks to be able to deal with this as the gaza quinces become more apparent?
-- the consequences become more apparent? enda: other countries don't have much room to cut, so their options are more limited. there is a debate that this v-shaped narrative might be overly optimistic. there are those saying we are looking at a u-shaped recovery, that the impact on china's economy will take longer to recover, not just for china but the regional partners and the rest of the world. if it is not the full heat up to mystic scenario, -- optimistic scenario, there is they will have to do more work to support economies, including the central banks and finance industries. thank you so much. let's get the first word news with su keenan in new york. su: we begin with president trump's plans for the wall with mexico. reports suggest the trump
administration plans to reduce the amount of money it wants for border wall construction. dow jones says the white house will request to billion dollars in congress leader monday which is less than the amount it called for a year ago. much of the cost has been met by shifting money for military resources -- from military resources. boris johnson is planning to announce a boost infrastructure spending for the north of england. this follows campaign pledges he made. the plan will include spending on 5g networks in rural areas as well as investment in public transportation. the ft says johnson will give the green light to the much delayed high-speed train line 2 this week. ireland facing uncertainty after election results look set to leave the traditional two-party structure in chaos.
there is a tie between two parties. and there is a surge in support for another party. armyrish republican offered itself as a leftist alternative to the centrist consensus that has dominated ireland for decades. and thailand says 29 able were shot dead and 57 -- people were shot dead and 57 wounded. authorities say the army sergeant who carried out the firing rampage was angry about a financial dispute and was eventually killed after a standoff with police in a district northeast of bangkok. the prime minister said the incident was unprecedented in thailand. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg.
shery: lockheed martin is among those pulling out of singapore's airshow because of coronavirus concerns. the director general gives us the lowdown on that and the outlook for the aviation industry this year. haidi: if you thought 2019 was far looking20 so like it will challenge that. why tot guest tells us expect more volatility. this is bloomberg. ♪ g. ♪
a reminder to asian viewers about the wage and labor market numbers, let's go into the bloomberg. taking a look at wage growth, it did get above par. markets didn't really react. we had the s&p putting an end to the four-day winning streak. is there a sense after a few days of brushing off the virus concerns, global investors are starting to connect the dots when it comes to the financial -- potential real impact of the crisis and supply chains globally? >> yes. i think the coronavirus is a real immediate threat to pay attention to, to see how is that going to affect the global economy. we just saw that j.p. morgan slashed the chinese gdp numbers and goldman sachs is indicating
10 to 20 basis points coming off of global gdp as a result of the coronavirus. we don't know the full extent yet. even though we had those great jobs numbers, the immediate concern has been the coronavirus. shery: have we topped out in bond yields? ? ems after the 195 we seems after the 195 we reached in november, we are nowhere close to what we are talking about in 2019. -- we were talking about in 2019. >> we have been seeing an inverted yield curve once again. uninverting once again. there is movement in the bond markets and it seems like they are more concerned than the equity markets have been. shery: what does that mean? where are equity markets loreen: heading? what we have is momentum in
large cap technology stocks, see momentum around that trillion dollar club of market capitalization. that is why we are seeing a lot of movement. if you compare those numbers with smaller technology stocks, what we a dispersion of are seeing year to date. much of the returns have been around the large-cap names. not so much around the small-cap names. there needs to be caution and that is where we are telling investors to look at doing upward as far as market capitalization. haidi: looking at a bit of crystal ball gazing but it has been -- is there an indication investors haven't properly prepared for little the volatility even if we didn't have something like coronavirus? every chance something would topple valuations off of the
purchase -- price purchases you have been on? that is a great point. investors tend not to rebalance their portfolios after such a great year. what that means is investors may be overweight in their equity positions and not waiting any longer to make sure their portfolio is in line with risk tolerance. taken --people have they haven't been paying attention. they want to keep those names they are near and dear to that have been doing well and tend to not rebalance. trading --are you treating political risk? loreen: when you look at clinical risk, we are in an election year -- political risk, we are in an election year. overall they have been positive years.
over the last 24 cycles, there have been four that posted negative returns. we think there will be a good, positive year in the markets, this year being an election year. there are political risks. the reason the markets haven't reacted yet is it is too early in the election cycle. we do expect volatility all throughout the year, especially as we come to know who are the final candidates who are listed on both sides of the aisle for the presidential election. shery: lauren gilbert, thank you. we will discuss politics. the democratic presidential candidates are facing their next test in new hampshire. david westin joins us with the preview. this is bloomberg. ♪ ♪
haidi: this is markets: asia. shery: we are two days away from the new hampshire democratic primary. how close is the race? let's go to manchester where david westin is standing by. the latest headlines are saying mayor pete buttigieg wins the most iowa delegates. that was a very messy result. we know that pete buttigieg is riding high entering new hampshire. how are things looking? david: we don't seem to be able to get past iowa. it turns out pete buttigieg has 2 more candidates that bernie sanders coming out of iowa. a lot of polls pretty much every day, which indicate on average bernie sanders is in the lead. bert -- pete buttigieg is
nipping at his heels. lullaby elizabeth warren and joe biden in fourth position. joe biden is in fourth position, didn't expect to do that well we until south carolina. but how badly can he do, keep this whole campaign going? shery: what does this mean for joe biden? his performance in iowa was not that great. have significant would new hampshire -- how significant would new hampshire be? and to put into context, why are they important? david: we have to ask that in the united states, much less in asia. there is 1.3 5 million people in the state of new hampshire. it has had the first primary for a long time. they have a statute that says they have to have it. it is a cottage industry. it is one of the first real test . so is maybe iowa. retail politicking, where the
candidates have to visit with the individual voters and to know them and it is the first one out but we put it in perspective it is a small state and homogenous state. there is not a lot of diversity in new hampshire which is something the vice president biden is emphasizing because he says he can appeal to a more diverse audience and that is what the democrats will have to do. haidi: have we seen a reallocation or redirection of what democrats are focusing on, spending for example? david: certainly money matters in the united states in terms of ad buying and social media. by all accounts, joe biden is struggling. he is in fourth place. the money he has to spend -- bernie sanders doing well, $25 million in the month of january alone. pete buttigieg is doing well. pullback, joethem
biden, elizabeth warren, with the ad buys. it is important. the two are interrelated because if you think about it, do you want to write a check to a candidate if you are not sure they are going to make it? you have to raise the question are they going to make it if they don't do well in the primaries. haidi: what was your assessment following the debate? was there a stronger performance than others? david: it is in the eye of the beholder. a lot of people say amy klobuchar did a strong job. she is ready effective at debating. -- pretty effective at debating. the democrats are more inclined to take each other on directly and drawing distinctions. going back to joe biden, trying to draw distinct with pete buttigieg, saying you are no barack obama. he has an ad that is pretty
direct about pete buttigieg and what he did as mayor as opposed to what the vice president did as vice president. shery: we have seen president trump's approval rating at the highest ever. he was acquitted in the impeachment trial. have strong is his position going into the race? -- how strong is his position going into the race? david: it is quite strong. people vote with their pocketbooks. we have the jobs tempers were good. and there is almost no unemployment in new hampshire. they have no skilled workers. it is hard to say we have suffered. new hampshire has done better in gdp growth than the rest of the country. shery: thank you. you have a busy few months ahead of you. we will have special coverage of the new hampshire primary 8:00
hong kong time. if you are watching from new york, it is 7:00 p.m. facebook is pledging to improve securities to resolve a lawsuit. the blame for a data breach that exposed the personal data of 29 million users. the network says it will check more frequently for suspicious activity including access tokens which allow users to access their accounts. is in talks with customers in china to delay shipments of hunter -- copper concentrate. they could be given flex ability on discouraged to discourage them from enforcing a way out of obligations. there is a record 14 straight days in london, on concerns of the virus and global slowdown. shery: daimler could announce 50,000 job losses when earnings are released tuesday. this comes after the company had already decided to cut 10,000
asia.is is markets: we begin with the latest on the coronavirus front. the world health organization is leading an international team of medical experts to china in order to help combat the spread of the coronavirus. more than 900 people have died and the number of cases is approaching 40,000. more cases have been reported in singapore, japan and europe. $10 billion tong control the outbreak and is calling for more global support for medical supplies. in cruise liner quarantined hong kong has been released
after all the passengers and crew were found to be cleared of the virus. the ship was in lockdown after docking wednesday. three chinese passengers who left the ship earlier were found to have the virus. hong kong port officials say tests were created ahead of -- completed ahead of schedule and they were negative. the arab world is dialing back criticism of the middle east peace plan from president trump, coming up with a moderate proposal calling for a palestinian state based on the 1967 borders but no longer condemning the u.s. proposal directly. tunisia has circulated a partnership resolution in -- resolution in partnership with indonesia. they describe israeli settlements in the medals -- west bank and east jerusalem as illegal. iran defies western sanctions and has displayed a new missile
for the revolutionary guard. the military says the new short has hadllistic missile its range increased by 200 kilometers. ctv says the fuselage is made up said the fuselage is made of recycled materials. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. haidi: going back to our top story on the coronavirus, hong kong says the number of people entering from mainland china fell after a 14 day quarantine period was introduced. let's go over to this reporter. can we say how effective the quarantine measures have been? yvonne: the government is saying
things are running smoothly. of arrivals from the mainland dropped significantly by 75% at the three checkpoints that remain open including the -macau bridge kong and shenzhen bay port. 119 people have been quarantined, most of which are hong kong residents. they will be using mobile phone apps to monitor the real-time locations of those being quarantined. the government says the next two weeks will be critical, after we learned of a jump in affected cases in hong kong, a total of 36 right now. case, a family of nine who went out for a hot pot and barbecue meal. the government urging families to limit these social gatherings. the people on the world dream
cruise that was in quarantine off of hong kong were able to disembark sunday after the 1800 crew members tested negative for the disease. at least three of the chinese passengers before did test positive when the vessel was in vietnam in january. the passengers and remaining crewmembers were able to leave in batches sunday afternoon. shery: despite the fact people are refraining from the group activities, we have seen some isolated protests in hong kong. give us an update with those seven or eight months of unrest. evolving. is this is the longer a test of where politically speaking the government is when it comes to these protests, but people are more angry at the government response to this outbreak, that
they were not quick enough to close off the borders with china , given the close ties the city has with the mainland. a lot of the pro-democracy protesters, the ones that have been active, are saying this is not the end. it is going to be more invigorated after this outbreak subsides. more people could be coming out, given the fact it is not just incorporating the political landscape but also the government's response to this disease. china'sarts of industrial heartland returning to work after extended holiday. let's close -- cross to david ingles. we were thinking given the severity of this outbreak, some more businesses would take it easy, extent the holidays. -- extend the holidays.
what are we expecting? david: more from the state sector. compared to where we are in the private sector, we know those things are being pushed back. what is important to note as fresh china coming back online -- far as china coming back online today is the first step to normalcy. in no way should anyone expect things to ramp up to full capacity this week. we had a report from the korean economic daily talking about factories. posco, opening in wuhan later this week. as the report points out, it will take some time before things ramp up to full capacity because people are still at home or not coming into the big cities. goldman sachs, very straightforward. it will be very important to see how quickly things ramp up. also whether or not that opening
up of transport networks actually results in a sort of phase two, new wave of infections. we are getting this latest kind of targeted stimulus measures. what do we know about the real -- ng -- read lending relending program? david: you will sign up for the loan. it will be discounted loans up to 100 basis points of the prime rate. they are targeted area that is a good point to make. it is meant to ensure that there will be funding available for either businesses affected by the coronavirus, or businesses that are at the forefront of countering the spread of the virus. do we have a better idea of the damage to the economy? forecastshave more
coming through and i will put them against the backdrop of the stress test in the banking system. ubs said growth this quarter could be as low as three point 8%. -- 3.8%. the annual stress test china conducted last year for the banking system had the worst case scenario at 4.15%. in that scenario, the model showed nonperforming loans going up fivefold. i'm not saying it will fall to 3.8% but we are somewhere in the 's, higher 4's as well. are one part of what we get hit with the banking system. being used as policy tools to combat this. ingles in hong kong with a look at what we are expecting out of the pboc.
let's take a look at how the stock is trading in asia. we are looking at a cautious start with sentiment, snapping the four-day winning streak despite strong labor market and jobs numbers out on friday. this is a downside of half a percent for the aussie markets, new zealand trading in negative territory. the aussie dollar languishing at lows last seen in 2009. clearly risk appetite is lower when you take a look at treating in the aussie dollar -- trading in the aussie dollar. off .5%.tures u.s. futures trading lower as well. the global economy is being weekend by the coronavirus -- weakened by the coronavirus. air travel is being hit. we are assessing the implications. this is bloomberg. ♪ this is bloomberg. ♪
haidi: this is bloomberg markets: asia. shery: the airline sector has been among the hardest hit by the coronavirus. bloomberg's new energy financing says travel by plane is down 77% from a year ago in china alone. the health emergency will be a key focus as the singapore airshow kicks off. herdman will be among the attendees. he joins us from singapore. theseembers include airliners from asia. is it fair to say the hardest hit is the hong kong and chinese airlines like cathay pacific? >> yes. the epicenter is in china. so four of the chinese carriers, the world's second-biggest
domestic market after the united states, to and from china , networksher airlines inclusive of china. you mentioned the figure within china. the impact holes where is more needed but it is still very significant. significant is more but is still very significant. if you take all of asia-pacific, it would be a third of global travel. china would be almost half of that figure. overall, if china is down 50%, that would be about 25% impact on the whole of asia and china is down more than half of that. we are talking a significant falloff. airlines have cut back on services and the situation is compounded by the fact governments have introduced travel restrictions against the advice of the who, complicating matters from an airline perspective.
when you look at the airline is this, it is difficult to be in. you are seeing her to australia cutting its hong kong-australia - seeing ♪ some of these measures might be taken any way to tighten up his mrs.? -- businesses? >> it is a paradox as the industry grows in size every 10 years. it is essentially competitive and airlines struggling to maintain profitability. those challenges are always there. this is entirely unpredictable shock to the industry but we have had similars in the past with the sars virus and natural disasters. there is a strength and resilience and it will recover quickly.
in terms of the focus is, they are on the short-term -- terms of the focus, it is on the short-term. the contingent is a separate discussion which was true before this outbreak and it will be true after. shery: the situation involving every single day, new numbers 35,982 confirmed cases. 908 deaths as of february 9. the death toll rising to 908 and numbersirmed cases of within china, 3500 -- 35,982. let me ask you, how are you advising your member airlines to help ensure the health of passengers? health of
passengers and the traveling public is foremost in our minds. we have guidelines on how to respond to make sure your travel is safe, including from the point of view from infectious diseases. airlines have stepped up with cleaning and other preventative measures. the basic advice to travelers is the same as on the ground, wash your hands frequently and think about etiquette if you cough or sneeze. it is no different from other elements. if someone is discovered to be some to medic on a flight, -- symptomatic on a flight, there are procedures. the main thing is trying to maintain connectivity in accordance with who's recommendations and then responding to demand as we see it.
haidi: the fatalities have exceeded those of the sars 17 years ago. we don't know how long this will go on but we have seen a slowing with the number of cases and fatalities being announced. how quickly can the industry bounce back from a challenge but this? -- challenge like this? loreen: if we look backloreen: at the sars, the duration was three to six months, sharp decline. in that phase, it was hard to imagine it bottoming out and what form recovery would take. we can see recovery was dramatic within six months. it was back to precrisis levels. whether it will play out in the same way is unknown. but we need to be prepared and this industry is resilient. as we can cut capacity and adjust, we can put it back into the marketplace.
ofdemands on the progress the disease and public sentiment. the evidence was as fear spreads rapidly when you get an outbreak of this kind, confidence is restored by a similar social mechanism. we saw at that time a quick recovery and full recovery. we need to be prepared, but to emphasize, we don't know. we will take guidance from the medical professionals who are monitoring closely dating -- daily developments and the ugly trajectory. it depends on the success of medical efforts to contain the outbreak. the consumption -- what about airfreight? last year was a terrible year for freight because of the trade war. we have the phase one trade deal , things looking up. how much does this impact the
freight side of the business given supply chains being disrupted, as well as on the demand side of things? airlinesioned asian carrying a third of the global passenger traffic and a similar proportion of global air cargo traffic. it was a tough year because of the trade disputes. air cargo was down 3%. there was a full of traffic volumes. we saw -- we were expecting a modest upturn this year in terms of the impact. supply chains have been disrupted. a lot of factories shut down for chinese new year. it is not obvious at this stage the supply side of things. in terms of capacity, the cuts in passenger services takes freight capacity out of the marketplace, and it might be necessary to deliver freighter
services to meet demand. in terms of assessing what the impact is on the disruption to supply chains, that will ripple out. you have heard from people around the world how it may affect supply chains. is used to pull until the and will respond quickly -- accordingly. there is more than adequate freight capacity available. last year we saw downturn in volumes and freighters, there is plenty of capacity available. we need to be mindful of the fact some governance put restrictions on argo flows again against the recommendations of the who. that is -- cargo flows again against the recommendations of the who. shery: we have seen israel widening its travel warning to other asian destinations like thailand and japan. what is the risk there could be restrictions to other asian
destinations, and argue talking to -- are you talking to governments about this? >> we are concerned because the who recommended no restrictions on travel or trade. there is a mechanism that if governments wish to impose travel restrictions, they need to understand -- they need to tell the who within 48 hours. many countries have not been keeping them up to date with those measures. it is also recommended that the who can ask for the public health rationale for such measures. thated more dialogue on subject, because some of these measures, while well-intentioned, are counterproductive. they caused significant disruption to the wider economy and people getting on with daily
lives. that is an issue. we understand why some of the government's feel the need -- governments feel the need to introduce it. we have to look at the impact young travel and -- beyond travel and tourism. shery: think you for the latest on the in line -- airline impact. we are getting numbers from japan, the current account 524nce with a surplus of billion yen. ¥424 billion. this is staying on the surplus side but it is narrower from the month of december. japan's large net point asset position is -- in the month of december came in at ¥524 billion. we will have plenty more ahead especially on the singapore airshow.
haidi: let's get more on the coronavirus. it has the potential of obstructing that phase one trade deal. larry kudlow said china should be able to meet obligations despite the spreading infection. >> president xi and trump spoke .y phone last evening very constructive conversation. president trump believes china can handle the virus. we are helping them with all kinds of exports. is a great sign. on the export story, not only tariff reductions but president xi said, it may be a little slower to purchase american exports, but it will get done by
the end of the year and next year. they are especially interested in medical supplies, pharma stuff and agriculture. the export boom we are expecting from these strong new trade deals -- let's include usmca, that will help the economy. tom: you mentioned important things. has china consulted with the united states and requested exceptions for the purchase agreement you made a month ago? >> not formally. the two leaders have talked about it at staff that will discussions. nothing formal. obviously they are in a shut in regarding their industrial plants in a number of cities but president xi reassured president trump in this phone call that while there might be some delays in the purchase of american exports, the job, the markers of $200 billion over the next
couple of years will be met. tom: do you think they can meet the targets for this year? whether we are setting ourselves up for failure, on the chinese side as well as the u.s. side? large chunks of the economy is shut down. how will they meet those targets? ourselvesnot setting up for failure. it is a mild delay. i am not a medical expert. a lot of people think this virus is going to run five or six months. some people are saying the rate of increase and spreading has slowed down. the world health organization disagrees. i will stay with the official view it is not slowing down. having said all of that, the issue is not an economic issue or trade policy. it is a public health issue. shery: the national economic director larry kudlow with jonathan ferro. we will have more on the impact of the virus on the economy.
haidi: asia's major markets have just opened for trade. shery: good evening from new york. come to bloomberg markets: asia. -- welcome to bloomberg markets: asia. haidi: our top stories this monday, china sets aside $10 billion to control of the coronavirus. researchers say sections may peak this month. china beefs up its response.
outputs suffered. shery: the outbreak is another blow to hong kong where rivals are plummeting. the economy was already reeling from months of protest. let's get straight to the market action. >> investors continue to assess what any economic outlook -- economic fallout from the coronavirus may look like. it is very much and risk off picture. the nikkei and topics lower. was aoes come after what very strong week for stocks in asia. japanese stocks having their best week since mid december. we do see the japanese yen higher versus the dollar. this comes after what was the sinceweek for the yen 2000 18. today, it is the best-performing g10 currency. yields -- 10 year jgb
lower at the moment. south korea does come online as well. .he cost ease taking a hit last week was the best week in four years. we see australian stocks and new zealand stocks within lower. declineses extending from the losses we saw on friday. remember that last week, the s&p overall despite the losses we saw on friday, was up roughly four and a half percent. as we see,dollar slightly lower, actually one of the worst performing currencies today in the g10. as you can see from last week, we are now moving to a risk off picture. the offshore yuan has weakened.
at 1.56treasury yields after climbing to 1.65. death tollgh global from the coronavirus has topped 900 as hubei province posted the most fatalities in one day. our china correspondent has the latest out of beijing. tacos through the latest numbers. -- talk us through the latest numbers. selena over the weekend, you had or numbers around the world. that is at the world health organization is standing -- is sending a team of experts. the world health organization will also be holding a global forum in geneva to accelerate research. hubei province is dealing with a shortage of doctors and equipment despite the chinese
government building a hospital in a matter of 10 days and sending in 10,000 medical experts. china is pushing producers of medical equipment and drugs to provide them as soon as possible. in terms of the broader government effort, china says it has already felt -- already spent 4.5 billion dollars of the $10 billion it pledged to fight the outbreak. the central bank is providing the first batch of funds to companies that have been impacted by the outbreak. there have now been more than 37,000 cases, or than 900 deaths. -- more than 900 deaths. see moretarting to stabilization in terms of the numbers being reported out of hubei. predict the virus mady
peak by the end of the month. andy: tell us about wuhan the province overall. we have any sense of with the economic toll will be? selenaj every day is another day of: pain for the economy. for a bit of perspective on the size and scope, hubei is an industrial powerhouse that is about the size of sweden. it is at the heart of the country's auto sector. you have local companies who are producing car and car parts. you have more than half of the top 20 global component makers. now, you have hundreds of manufacturers getting disruptions to their supply chain. that that makes the
majority of iphones reported a loss in revenue. they are asking employees to not start work at their facility. when they start depends on guidance from the local government. they are examining if they have enough components in place to limit the risk of the spread of the virus. this is a risk factor to apple. our china correspondent, selina wang, in beijing. you can keep track of the story by running the function ver u.s. go -- vrus go. .hat is vrus go firstoc will provide the batch of special relenting funds for a fighting the coronavirus
on monday. we are joined from singapore by mark. give us a sense of how significant these relenting funds will be for the economy. mark: is very important for china to reassure investors that the central bank is on top of the situation. the last thing china would need is for liquidity to start drying up in financial markets. asy need those to work smoothly as possible. what we are seeing is the pboc is encouraging banks to lend money to the companies that really need it. this will be a very attractive rate. it could be up to 100 basis points. they have been encouraged to do it as quickly as possible. it gives the signature -- the signal to investors that all liquidity levers will be pulled.
there is talk that the prime loan rate will be lowered later this month. bloomberg economists are looking for this to come down as much as 40 basis points this year. that would be a significant injection of liquidity. ratee already seeing repo lowered by 10 points this week. it is showing it is really engaged with financial markets. this will give some reassurance because people are already trying to guess how bad the economic hit will be. this helps them to stay invested in markets even when they are not sure where the danger is going. has continuedlar to weaken. the widert reflect concerns across the region? mark: people in asia will be looking at singapore and saying, if an open trading place like
bigapore is going to take a economic hit, then it could region.nybody in the because of the way the singapore they aresket works, all part of this basket. steeringsee singapore their currency to a weaker level, that is going to have repercussions for any other currency. the direction it gives to people, it shows singapore is taking this seriously. so should other people in asia. when you get weakness in the singapore dollar, it is a message across the region. . although the singapore dollar has weakened already, it has a little bit of room in its trading basket to soften a little further. if the news continues to be negative, you may see people start to push it toward the extremes of the basket, which
will come under review in april, the next time the central bank sits. they will have to decide whether or not the trading range is suitable or if they need to move it into a different trading range. dollar is one of the active trading currencies this weekend that is for sure. you can follow the trading action on today's blog. you can get a market rundown. there is ongoing commentary and analysis. you can get exactly what is affecting your portfolio. let's get you the first word news. andwe start in the u.s. washington where a report suggests the trump administration plans to reduce the amount of money it wants for border wall construction. the dow jones says the white house will request to billion
dollars from congress, which is significantly less than the amount it called for a year ago. much of the cost has been met by shifting money from military resources. u.k. prime minister boris johnson is preparing to announce a boost in infrastructure spending focusing on the north of england. government sources say the plan will include spending on 5g networks in rural areas and investment in public transportation. johnson will also give the green light to the much delayed fast rail train this week. it is a high-speed train. afterd faces uncertainty its election result looks set to leave the two party structure in chaos. exit polls show a virtual dead heat. as well as a surge in support
for a third party. the political wing of the irish republican army presented itself as a leftist alternative to the consensus that has dominated ireland for a decade. thailand says 29 people were shot dead and 57 were wounded after the -- after what they are calling the country's bloodiest shooting in century. the shooter was angry about a financial dispute and was killed after a lengthy standoff. the prime minister says the innocent -- the incident was unprecedented in thailand. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan. this is bloomberg. still ahead, the coronavirus may issue a
haidi: this is bloomberg markets: asia. economists are scaling back their forecasts for chinese growth amid continued concerns from the coronavirus. our guest is downgrading her forecast of five .4% growth this year -- 5.4% growth this year. joining us from hong kong is wang tao. great to have you with us. the 2020our take about gdp growth downgrade to 5.4%.
you -- do you expect any of the government's efforts to help out in supporting growth in the meantime? tao: yes, we do. the 5.4% already assumes the government will ease policy. growth would have been even lower. our assumption is that the coronavirus will be controlled in the first quarter, meaning after the end of march, they will be few new cases. this is an assumption. economyis the case, the hit will be in the first quarter. normalizel start to including transport in passenger traffic. also, the government's policy support will come in, including more liquidities and fiscal health. the second and third quarter growth will rebound very sharply.
even with that, the growth in the full year is going to come down to 5.4. will -- how big of a problem arising consumer prices be? the expectation is at will have accelerated from the previous month. we continue to have pork prices rising. these issues with the virus outbreak, how much more pressure could cpi take? o: the january cpi number probably has not reflected the coronavirus because the numbers tend to have been taken before the chinese new year. our expectation is higher demand for pork. it is going to push up the pork prices. january probably is around five. it has accelerated further.
some of these prices have gone up. at the same time, as people cut down consumption and stay home, a lot of other prices would have come down most likely because there is little demand. for the year and the first quarter, we are seeing some prices have moved up. some have moved down. we have not changed our forecast for the year in terms of cpi. haidi: that inflation and evention picture becomes more complicated for policymakers to balance. you do not envy the pboc. they are about to start the relenting facility this week to affected economies and businesses that have been affected by the virus, how successful will this targeted lending be? when you read through the communications, it seems like they will do whatever it takes
to maintain financial stability as the key to their agenda. moment fork at this the central bank, the key is to make sure business operations and market operations are smooth. the number one priority is to make sure there is enough liquidity. that is for smooth function. want to increase lending from small companies. fiscalort the economy's measures is more important. the ministry of finance and some local governments are coming out with measures including cutting tax and fees for businesses. in some cases, cutting rent. they asked state owned companies to cut rent further private sector tenants and also support subsidies for employees because a lot of people are not going to get back to work. they are not going to get paid.
it will be more unemployment. this kind of fiscal health will be important. the central government also needs to increase spending on the health care system but also infrastructure spending. those measures still would be in the pipeline. discussions are still taking place. we expect those numbers to come through. haidi: a lot of these directives are targeted at the banks in rural areas where we are seeing small and midsized businesses heavily impacted by the virus. this chart scares me a little bit. this is looking at china's dead debt situation -- china's bad debt situation. banks wenttests the through last year -- we are now seeing estimates saying we could
see below 4% growth. that means the ratio could rise more than fivefold. growing at the slowest in three decades. how ugly does this get? are we going to see more measures to make sure these companies do not go under? tao: for the first quarter, we see growth come under 4%. we do see the coronavirus as a one-off shock. growth goes down very much in the first quarter and then rebound. during this process, a lot of small companies will come under stress. liquidity support and the extension of loans and fiscal subsidies will definitely help. all real growth is slowing. are likely to rise.
more npo's will likely happen. we do see growth rebounding next year. i do not see this as a trigger for more systematic problems on the debt issue. note, on that optimistic we will have to leave it there. ubs chief china economist joining us. you can catch us live and catch up on past interviews and diving into any of the securities on the bloomberg functions we talk about. any questions for our guests during the show. this is for bloomberg subscribers only. check it out on tv . this is bloomberg. ♪
bernie sanders and pete buttigieg are leading in new hampshire paul days before the primary. president trump sent his sons to campaign. here is what you need to know ahead of the event. >> we are going onto new hampshire victorious. >> people in new hampshire like to say i will picks corn -- say pickpicks corn, we presidents. in 14 of new hampshire primaries, the winners went on to become president. ,ome democrats say this year maybe the results should come with an asterisk. bernie sanders is from vermont. elizabeth warren is from massachusetts. allies point out candidates from neighboring
states always have done well in new hampshire. biden is downplaying expectations while >> going after sanders. he calls himself -- sanders while going after -- >> sanders had spent $3.6 million on tv and radio ads in new hampshire. warren and biden were not even close. spent $5 million in iowa. perhaps he is counting on the belief that in new hampshire, when those in person and not on the air. the complication front rider to -- that front runners had not counted on is pete buttigieg is now mentioned with them. >> we are booting on a coalition that is reaching out to everyone to ring about the better day. >> the race could be decided by voters who are not even registered democrats. four years ago, three fourths of them went for sanders.
that turned a tight race with hillary clinton into a landslide. shery: we will have special coverage of the new hampshire primary on wednesday at 8:00 a.m. hong kong. you can watch it from new york at 7:00 p.m. to improve pledging security to resolve a lawsuit that blames the company for a data breach in 2018 that exposed personal data of 29 million users. the social media network says it will check more frequently for suspicious activity. php is said to be in talks to delay shipments. -- --discourage them from copper slated for a record 14 straight days in london amid
su: this is bloomberg markets: asia. we start with the latest on the coronavirus concerns. the world health organization has -- is leading a team of medical experts to china in order to help combat the spread of the coronavirus. 900 people have died and the number of cases has passed 40,000. most cases were -- more cases reported over the weekend in japan, singapore and europe. china is spending $10 billion to control the operate and is calling for global support for medical supplies. the cruise liner quarantined in hong kong out of concerns of contagion has been released after all passengers and crew
were found to be clear of the coronavirus. the ship had been on lockdown since talking wednesday, after 3 -- docking wednesday after three passengers left the ship earlier were found to have the virus. test on all crew members were found -- were completed ahead of schedule and all negative. in the arab world, they are dialing back criticism of president trump's middle east these plan, maintaining calls for a palestinian state based on 1967 borders but not condemning the u.s. proposal directly. tunisia circulated a resolution in partnership with indonesia where they ask for the territorial integrity of palestinian lands. they describe israeli settlements in the west bank and east jerusalem as illegal. defyis continuing to western sanctions and has displayed a new missile for the
revolutionary guard. missilert range listed has its range increased and cost cut in half. they say the fuselage is made of composite material to make it lighter. it can now hit targets 500 kilometers away, a fraction of the cost of its predecessor. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. shery: it is a tough start for equities across asia, u.s. futures under pressure. reporter: red does continue to dominate the screen. the nikkei and the topix down, falling back in line with the 15 day moving averages. the kospi lower by 1.3% after what was its best week in four years.
up the board, look at the commodity complex because it is emanating with risk off field. extendingwti crude losses after five straight weeks of decline, down .9%. brent below $54 a barrel. wti crude below $54 a barrel. we saw it punch through the measure last week. copper, rescinded the above cyclicals, falling, but gold is up. the safety of the yellow metal. i want to take a closer look at brent crude, switching up the chart. we are below $54 a barrel. five straight weeks of losses, the worst losing streak since november 2018. bank of america's head of north africa telling us earlier today downuld see brent falling
to $50 a barrel, a level not seen since 2017. thatts over the weekend opec may not be holding any emergency meeting which had been discussed last week. not a pretty picture for oil and some investors expecting even a further fall. back to you. haidi: hong kong says the number of people entering from mainland china fell significantly after the 14 day quarantine was introduced. effective that we say these nations have been affected? yvonne: a couple of days in, so we will see how things go. the government did come out with a statement saying things are running more smoothly. when it comes to the total number of arrivals from china, that has dropped by more than 75% out of the three border checkpoints which remain open with hong kong and china, talking about the airport, the
hong kong-macau bridge and shenzhen bay port. and we learned a total of 918 people who have been quarantined as of saturday, most of which are hong kong residents, and the government say the next two weeks are going to be critical. they are monitoring those quarantined with mobile phone apps to track their real locations, real-time i should say. the number of affected cases jumped over the weekend by one third to a total of 36. the latest case, a family of nine who tested positive after having a hot pot and barbecue meal. the government urging people to limit these types of social gatherings and alleviate the concern of the panic buying we have seen. the quarantined doesn't impact freight services -- quarantine doesn't impact freight services. saturday alone 2000 vehicles
carrying goods came into the city. people should not be worried about shortages when it comes to food and goods like toilet paper, although i was running around the grocery stores this weekend seeing empty shelves. from the have heard finance secretary in hong kong. what is he saying? a blog he mentioned in post the effects from the virus could be more severe than what we saw in 2003 with sars, in particular because the economy is more dependent on tourism and retail, both of which have been hammered by the pro-democracy protest from last year and the outbreak of this disease and he was citing mainland tourists that make up three quarters of total tourists in the city. you compare that back to 2002 before the outbreak of sars, the number was around or a little
more than 40%. you see heavy reliance with mainland tourists. ony say expect job losses the way. he is expecting the unemployment , the lastrpass 3.3% print we saw last quarter. when it came to the financial sector, still running smoothly, not seeing big fluctuations with bonds, fx or derivatives although there have been volatility in the stock market. he is reassessing the impact of the virus on the community into his budget proposal set to come out at the end of this month. shery: thank you for that update. some relief perhaps could be part of -- as parts of the industrial heartland are returning to work after an extended holiday. we are seeing the latest headlines from a few manufacturers were turning and turning back on their factories.
david: that is correct, but it is unclear to what level, capacity level they can wrack -- ramp things up. we will be tracking this closely. it is a step back towards normalization. i should note some companies are still shut today. they have delayed when the restarts will be. but good news here, samsung has been operating its chip -- its plant. they will be resuming the compliance plant in china. there will be some time for everything to return to normal. it is granted the first day back at school after like half a month where things have been shot across massive parts of the industrial heartland. -- shut across massive parts of
the industrial heartland. haidi: this is a special relenting program where banks are expected to lend out far below interest rate levels. do know how effective this will be and the impact on lenders? thing lenders, first comes to mind is what happens to their margins. if you look at the loan prime was 3.2ot mistaken, it 5 -- 3.25. that goes to the best clients. but this could be as much as 100 basis points. that alone tells you these are loans meant to augment the liquidity -- offset the liquidity concerns. i'm sorry to use the toilet paper example, they are flushing the economy with liquidity as well. someave to understand local banks across 10 provinces
and cities as well. the application will be expedited within two days as well. we will see other it works. hopefully it will. this: we had seen before health emergency beijing trying to get a handle on its banking crisis. with the economy slowing down, or expected to, what would this do to banks? david: it is interesting because last year they conducted a stress test. usually you look at what the fed does, what china did. you have a worst-case scenario. in china's case that was growth near 4%. in that situation, the loan ratio at the banks would surge fivefold. they are still quite low but in that scenario, fivefold, guess where a lot of these forecasts
are for this quarter in china 4's, high talking low 4's, more bearish than i have seen. the realm ofout of possibility to see a lot of stress coming back into the balance sheets. that 4% growth, who would've thought of that? starting another week dominated by concerns over the coronavirus, looking at risk off sentiment pretty dire as we kick off the trading week. we will look at the potential impact with currencies next. this is bloomberg. ♪ ♪
haidi: the spread of the coronavirus will remain the dominant theme for markets as people are increasingly apprehensive. let's talk about the impact on currencies. -- where are you seeing the fallout? clearly there is a risk prosody with -- risk proxy. what are you seeing with the biggest losers in fx land? iswe think dollar [indiscernible] definitely push investors to put more money into dollar assets. they had some last week weekly data, people are looking -- allocating more money into dollar assets instead of local currency debt or e.m.. the current outbreak, the impact is bigger than [indiscernible]
the period of impact will be shorter. once we hear the all clear sound from the virus outbreak, investors will move their capital back into e.m. that is where there will be a risk rally in early march or late march. haidi: implications for the chinese yuan, it is an anchor currency for the emerging markets asian currencies. all of last week we saw the pboc pushing that reference rate lower than what the market is treating the yuan at. do we see -- trading the yuan at. do we see confidence in the currency? lemon: yes. the pboc, as you said, has continued by us. estimate,to our model the you cyclical factors to contend outside of dollar-cny,
but [indiscernible] that means pboc is not [indiscernible] the currency beyond what is needed to stabilize markets. so buying will continue to exist in [indiscernible] beyondar-cny rallies [indiscernible] they think the further strengthening is needed, they can always start interest in hong kong and cut rates further. cut more rates and supplies market last week. we expect them to cut another 5% to 10% in late february. how will the pboc balance the depreciation features on the currency, if you like market fundamentals against the commandment it has made against not depreciating its currency in the trade deal? why, we think they have a strengthening bias, they
want to stabilize the market and said of let the market panic -- instead of let the market panic. results in capital outflow. fx, in a agreement in phase one deal. we don't think the u.s.-cny beyond 7.2 is possible. --cny depreciated current from current levels, the pboc would come in and do more investment. we haven't seen any inflation in the market. shery: let's talk about the other side of the coin and the safe haven moves. this gtv chart showing us how the dollar-yen correlation with equities strong and rising as opposed to its correlation with em equities. what is the selling us about currency -- characteristics we can expect to see in the japanese yen moving forward? lemon: the yen is still one of
our top picks in asia assets. s&p 500correlation with has reached quite extremely high levels. if there is any consolidation in the equity targets, dollar-yen will have a big downside to growth. that is why we continue to be a list on yet. we think -- bullish on yen. not only because of the fundamental drivers such as real yield differentials we see in u.s. and japan, but also because the 670 amount, if the coronavirus -- further. it will continue to drive lower dollar-yen. we will have short dollar-yen in our portfolio now. thei: when it comes to dollar strength or resilience, is it changed from last year? the sentiment seemed to be this is where you park your money in the absence of anything better.
is it really volatility elsewhere driving that? lemon: we think 2019 is a year of bonds because everett central banks globally is cutting their policy rates. -- every central banks globally is cutting their policy rates. 2020 is the year of dollar, a story of a weaker dollar. we have 60% of global banks, yield orffers at 2% even lower and 20% offering maximum yielding bonds. in this environment, we still have low growth, low inflation, investors have to go high-yielding markets to put their cash. i think this year emerging markets will attract more capital inflows. that is when the dollar will [indiscernible] second half of the year. shery: always great talking with
you. standard chartered macro and fx strategist lemon zhang. foxconn is working with health authorities to limit the coronavirus spread and it will introduce safety measures to protect staff. the company has asked workers in shenzhen to stay home after the extended lunar new year break to minimize the health risk. the government is evaluating whether the work on shenzhen sites have the required measures in place. haidi: volkswagen has postponed a reduction at places in china after the coronavirus continues to disrupt the global economy. they cite limited travel for employees and the lunar new year. they postponed production for seven days until february 17, except for a plant in shanghai. that will resume work monday. w volkswagen production will resume monday.
shery: airbus is going to buy out the poem party or stake. -- barnier stake. negotiation's are at an advanced stage and the agreement could be announced. bombardedier -- giving up control to airbus in 2018 as it struggled with a single jet. sap says china's virus could add $800 billion of newfound loans. how the chinese banks are bracing for the worst case economic scenario. this is bloomberg. ♪
haidi: this is bloomberg markets: asia. i am haidi stroud-watts. shery: i am shery ahn. chinese banks are bracing for the worst case scenarios outlined in the annual stress test as the coronavirus spreads. last year's exercise imaged annual growth slowing as much as 4.1%. biggest banks would rise fivefold. china financial regulations reporter lucy joins us now. analysts saying the upgrade could force fourth-quarter growth to as little as 3.8%. how at risk are chinese banks?
>> that is right. the pboc put out this financial ability report last year and outlined a worst-case scenario. we are edging quite close to that. what is significant is the $800 billion that analysts are estimating is twice as, more than twice as much of the current nonperforming loans. analysts told us what is different this time from the 2018 financial crisis, even the 2003 outbreak of sars, is the lack of bank financing to prevent this. it is a tough time for banks but also a pressing time for these smaller firms who are in desperate need of funding where the virus hits the economy. haidi: it is interesting because the pboc in all of its measures
have continued to message that financial stability remains key when it comes to their mandate. does this mean we are continuing to see some effort to get on top of leverage and structural reforms are possible? >> we have seen the banking regulator push back the active manager roles. the deadlines for the end of this year, and that is to bring a lot of the shadow banking back on balance sheets. for companiesthat that are having difficulty, they can request an extension. they are doing something to -- helpinguess companies in need of capital and to reduce the stress on banks. but at the same time of course, there is this civic component of being a big state-owned bank. that includes giving the firms basically less fundraising,
sometimes even making it lower than the cost of funding these banks, these smaller businesses. so the stress is quite prominent, and we are just waiting to see how bad the buyers get. we had already seen the chinese economy expanded at the slowest pace in three years last year. what impact have we already seen in the banking system? >> right. ad loans were actually at historic high last year. we have also seen some of these regional banks really struggle as these years of taking on a lot of risk caught up with them and we saw the first bailouts in more than two decades. the banking industry was already seeing a lot of stress, and just
you know when the first phase agreement was signed and things were looking better for everyone, we had this gigantic hit. and now yeah. [indiscernible] called to the rescue, but it is unclear how much they will be able to -- shery: we will have to leave it there. we will have plenty more coming up on china open. we will quantify the coronavirus for china's policymakers and have the head of macro research -- this is bloomberg. ♪ when it comes to using data,
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>> it is 9:00 a.m. in beijing. welcome. sunday. welcome to bloomberg markets, china open. >> we are counting down to the open of trading on the china mainland and hong kong. china sets aside $10 billion to control the coronavirus as deaths top 900. the world health organization says the infections may peak this month. >> the pboc will offer special relending funds. >> and the global economy is